Mar 13, 2008

Last year, at the Justice
Department's urging, a rule was proposed that would require federal contractors
to report violations of federal criminal law with regard to the award or
performance of contracts. The rule, however, contains many exceptions, including
the exclusion of contracts that are performed outside the United
States

As POGO explained on this blog
last November and in our written
comments on the proposed rule, we applaud it as a step in the right
direction but worry that its effectiveness will be hindered by loopholes like
the exemption of contracts performed abroad. (In our written comments, we
focused on the mandatory reporting requirement, recommending that it be
clarified and expanded so that contractors are required to disclose a broader
array of unethical conduct.)

On Wednesday, Sen.
Chuck Grassley (R-IA) promised to push legislation to close the
outside-the-U.S. contracts loophole and added a nonbinding resolution condemning
the loophole to the government's FY 2009 budget plan. "There are government
contracts around the world, so there's the potential for fraud against American
taxpayers around the world," Grassley said. "It would be a disservice to
taxpayers to exempt overseas contracts when holding bad actors accountable, and
it's a no-brainer that this loophole should be
rejected."

Grassley is not alone. Both the
Justice Department and the Office of the Special Inspector General for Iraq
Reconstruction have asked that the loophole be eliminated before the rule goes
into effect. Meanwhile, Congress
is reportedly calling for an investigation into how this loophole came to be
inserted into the rule in the first place – was it added as a favor to some of
those aforementioned "bad actors" who want to keep sunshine away from their
foreign operations?

According to the article about
Grassley that ran in the New York
Times, out of $102 billion in Iraq and Afghanistan contracts
awarded since 2003, bribes alone have cost the taxpayers $14 million, with 44
people being charged with kickbacks, bribes and other abuses involving those
contracts. Halliburton and its former subsidiary KBR have been in the news
recently for providing unsafe water to
our troops in Iraq.